In a bold move to stimulate economic growth and ease the financial burden on citizens, the Government of St. Kitts and Nevis has announced a reduction in the standard Value Added Tax (VAT) rate from 17% to 13% for the first six months of 2025. The announcement, made by Prime Minister Dr. Terrance Drew during his 2025 Budget Address, underscores the government’s commitment to fostering economic stability and supporting families and businesses.
The VAT reduction, which came into effect on 1st January 2025, applies to the supply or sales of goods and services across the Federation that were previously subject to the 17% standard rate. This initiative, referred to as the “VAT Relief Holiday,” is designed to empower citizens by lowering costs and creating a more favourable environment for economic activity.
Clear Guidelines for Implementation
According to the Inland Revenue Department, transactions will be subject to the revised 13% VAT rate based on the following:
- When goods or services are delivered, completed, or made available.
- When an invoice for the supply is issued to the supplier.
- When payment for the supply is received.
The 10% reduced VAT rate for commercial rentals, accommodation services, and value of supplies by restaurants, as outlined in Section 27 (1) (d) of the VAT Act Cap. 18.47, will remain unchanged.
Ensuring Transparency and Compliance
To ensure that the benefits of the VAT reduction are fully realised, the government has pledged to implement strict monitoring measures to prevent price gouging and other unfair practices. These efforts will be supported by the recently enacted Consumer Protection Act and other applicable legislation.
The government is urging businesses and citizens to comply with these new guidelines to foster a smooth transition and maximise the economic benefits of the initiative.
Commitment to Economic Empowerment
Speaking to the significance of this policy, Prime Minister Dr. Terrance Drew emphasised, “This VAT reduction represents our government’s steadfast commitment to enhancing the quality of life for our people. By reducing financial burdens on families and businesses, we are taking a tangible step towards a more prosperous future for St. Kitts and Nevis.”
The Inland Revenue Department is also encouraging the public to reach out with any questions or for clarification on the new VAT policy. Enquiries can be made via telephone at (869) 465-8485 or email at ird@ird.gov.kn for St. Kitts or ird@ina.gov.com for Nevis. Additional information is also available at www.sknird.com.
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